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Aftermath of the Ontario election

Electricity policy emerged as a key issue in the Ontario general election of October 6th.

In the months leading up to the election and during the 30-day campaign, debate focussed upon such issues as: the rising price of electricity, the cancelling and amending of contracts with power suppliers, the economic benefits of the Green Energy Act and the future direction of electricity policy in Ontario.

The election of a minority Liberal government is sure to keep the energy/electricity issues in the firing line at Queen's Park. The fact that there will be many more PC and NDP members in this new Legislature all but guarantees that Premier McGuinty and his cabinet can expect a constant grilling on energy matters. Moreover, the Opposition will now have a much more definite role in ordering the business of the legislative committees where a lot of government business is normally transacted. Expect the Opposition to undertake more active and rigorous examination of such initiatives as the Samsung deal signed by Premier McGuinty 18 months ago.

Looking ahead, it is clear that the Green Energy Act will continue to attract attention. The recent election campaign revealed significant backlash in rural Ontario to the siting of wind turbines. In fact, virtually every riding with existing or planned wind farms voted for the Progressive Conservatives, costing the governing Liberals a number of seats in the Legislature and arguably their majority. The Ministers of Agriculture, Environment and Education all went down to defeat in the face of very focussed anti-wind campaigns. There will almost certainly have to be some kind of reconciliation in the months ahead to deal with the apparent urban/rural divide over wind farms.

Another aspect of this election campaign will surely involve the integrity of power contracts. In the dying days of the campaign, the Liberals announced the cancellation of a Mississauga gas-fired plant which had been attracting local opposition within the community. It was the second time in as many years that a gas-fired plant slated for the Mississauga/Oakville area had been cancelled. The consequences of these terminations are unclear at this time but the companies involved will inevitably be looking at legal remedies. And the power requirements to be met by these gas plants in the Greater Toronto Area will have to be met presumably by transmission upgrades and expansions which could have their own issues with host communities as we have seen elsewhere. They will also have their own price tag.

The rising cost of electricity was a much-discussed topic during the campaign. With growing concern about high unemployment, another recession and the cost of doing business in Ontario, don't expect this issue to disappear. Premier McGuinty and his colleagues have argued that these increased energy and electricity costs are largely the result of upgrading our transmission system and cleaning up the environment by providing for more 'green energy'. The Opposition has countered with their view that the pricing under the FIT program was prohibitively expensive and should be replaced by a competitive process that produces the best available price for the power generated.

Given the ongoing economic challenges facing Ontario, it can be expected that the provincial government will give new attention to the cost of electricity. While the FIT program will likely survive, pricing under the FIT contracts is likely to be less generous over time. As well, look for efficiencies in other areas. All three major parties have expressed concern about the growth of the many agencies established in recent years to oversee the energy market in Ontario. The Opposition at Queen's Park has made a great deal of the high executive salaries associated with these agencies. Expect some streamlining or restructuring of roles and responsibilities in this area with a view to reducing costs. And speaking of the drive for greater efficiency in the Ontario electricity sector, we may very well see a policy push for additional restructuring or consolidation in the distribution sector as distributors confront the costs of, among other things, the smart grid. Another reform might be assigning demand management and conservation programs to the LDCs subject to OEB oversight without the additional layer of OPA oversight.

One aspect of Ontario's energy portfolio that did not attract a lot of attention during the campaign was the nuclear file. That will likely change in the months ahead as the new government will have to make some important decisions around regarding both refurbishment and 'new build'. For the moment, it is important to note that both the Liberals and the PCs have clearly indicated their support for pursuing a 'nuclear future' for Ontario. The NDP is clearly not as supportive but even they are choosing their words carefully on this issue.

Electricity policy is inextricably linked to Ontario's economic future. At a time when jobs and economic growth will dominate the public agenda, expect this area of policy to remain very active and relevant to the daily lives of Ontario citizens and businesses.

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